Reimagine Funding in Africa.
Investment in African Startups has seen significant rapid growth with an influx of capital from local and international investors. The Continent is one of the fastest-growing populations globally with over 2 Billion people, having seen over 230 startups with at least 6 Unicorns.
To understand how the growth has occurred, a 2015 report shows the continent hitting a whooping sum of $277 million in venture capital investment compared to the $2.1 billion that was raised in 2019, according to Partech Africa.
We will take a look at some of the earliest key players in the venture capital scene in Africa on both local and international levels.
Among the few names to be mentioned, we will take a look at Ycombinator, Co-Creation Hub(CcHub) and a couple of other venture firms and incubators, and their roles in the African startup ecosystem.
Y Combinator is an American private venture capital company that provides seed funding for startups through its accelerator program. Seed funding is the earliest stage of venture funding, it pays your expenses while getting started.
The first African startup to benefit from Y Combinator’s seed funding through its accelerator program was PetaSales in the winter of 2009. PetaSales is a full-service marketing communication agency incorporated in Nigeria as LightWay Media Limited, operating from two strategic offices in Nigeria.
An additional two startups were accepted into Y Combinator’s accelerator program in the summer of 2015, Kenya’s Saida (a FinTech startup) and Senegal’s Oolu (solar power). The numbers doubled up in 2016 as the likes of Flutterwave and PayStack from Nigeria, Lynks from Egypt, and OMG Digital from Ghana all made it into YC’s accelerator program.
However, 49 African startups have been funded by Y Combinator so far, and we have seen exponential growth with Flutterwave becoming a Unicorn and PayStack exiting with over $200 million.
With the emergence of more African startups, venture funding has also grown exponentially with 234 African tech startups raising over $2.02 billion in 250 equity rounds of venture capital investments. Though a huge part of that funding was from international venture capitals firms, it is important to note some of the African early-stage angel investors and venture capital firms.
In 2015, Iyinoluwa Aboyeji and Nadayar Enegesi, co-founders of U.S-based and African-focused talent company Andela, kicked off the Future African Fund and wrote checks to African startups as angel investors. It is interesting to also note that Aboyeji co-founded Flutterwave in 2015, and in 2016 the company was accepted into Ycombinator’s accelerator program.
In January 2020, the pair simultaneously stated that Future African Fund had invested $1.5 million across 19 African startups.
Like Aboyeji and Nadayar, another Nigerian tech entrepreneur Bosun Tijani has had a huge impact on the growth of the African venture capital ecosystem.
Bosun Tijani is the co-founder and CEO of Co-Creation Hub(CcHub), a pan-African innovation hub with offices in Kigali, Lagos and Nairobi. He is also an angel investor, and via CcHub’s accelerator program and a partner fund called Growth Capital Fund, Tijani has invested in more than 40 startups.
Unlike in early 2000, it is relatively easier to start a company, scale it and get funded now.
Here is a simple instance, reimagine funding as boarding a sports car and trying to catch up with a rocket ship. The only thing now is that the sports car is the traditional loan system and method of fundraising, while the rocket ship is angel investment.
This is indeed the best time to start a startup and also the best time to become an angel investor.
However, the goal is to see more African startups get seed funding from African angel investors as we Reimagine Funding in Africa.